Friday, 29 June 2018

JAPAN: Japanese Culture Doesn't Condone Sharing, Airbnb And Uber Struggling

With thousands of Airbnb reservations scrapped and Uber reduced to delivering food, life is hard in Japan for the giants of the sharing economy. They’re stuck between tough regulation and popular suspicion.

Japan may be the world’s third-largest economy and a high-tech hub but it has been surprisingly slow to warm up to the sharing economy that has disrupted markets across the globe.

According to 2016 figures compiled by research institute Yano the sharing economy accounted for ¥50 billion ($455 million) in Japan.

While that’s a 26 percent year-on-year rise, it is a drop in the ocean compared with the Europe, U.S. and China markets, which are worth tens to hundreds of billions of dollars.

This is partly due to confusion among the public about what the sharing economy is: only 2.7 percent of the population are familiar with the concept according to a 2017 survey by PwC professional services firm.

Strict local regulations have also held back the sector ,as flat-sharing firm Airbnb found out recently to its chagrin.

On June 15, a new law came into effect that sought to regulate the short-term rental sector.

Although welcomed by Airbnb as a way to clear up the legal gray zone in which it has been operating, the new law has become somewhat of a double-edged sword, with thousands of owners forced to cast off property after failing to comply with the new requirements.

This stinks and that’s an understatement, fumed Airbnb as it announced it was canceling thousands of reservations with owners who had failed to obtain a registration number by June 15.

In addition, the law prevents owners from renting out properties for more than 180 nights per year and local authorities can impose further restrictions.

In Kyoto for example, the tourist-magnet city sees residential area rentals are only allowed between mid-January and mid-March, when there’s a slump in tourism.

Such restrictions are in effect choking the sector, says Hiroyuki Kishi, a former trade ministry official and now professor at Tokyo’s Keio University.

Vested interests are so strong in Japan, regretting that such measures are coming into force only two years before the Olympic Games when Japan hopes to welcome 40 million tourists.

For Airbnb, the laws seek to protect the hotel industry and ryokans traditional Japanese inns whereas the taxi lobby has made it difficult for ride-sharing app Uber to set up shop in Japan.

To promote the sharing economy, we have to loosen regulations to allow new players to enter the market, said Kishi.

He believes that despite the economical reform efforts of Prime Minister Shinzo Abe, the government has no intention of opening up the sector for fear of a backlash in sectors which have enjoyed a monopoly until now.

Sharing economy firms have faced pushback elsewhere too, with Uber being accused of skirting regulations and making long-standing jobs obsolete, and Airbnb criticized for pushing up prices and transforming residential areas in many popular tourist destinations.

In Japan, public opinion is very much against services like Airbnb and Uber.

We have tried to change this mentality but it is very difficult. It takes time,one Taxi operator says.

One reason is that Japanese are very protective of their privacy.

The culture of sharing is not ingrained in society and in the case of Airbnb, they do not like the noise and security risk caused by a procession of tourists in their backyard, he said.

In addition, unlike in many developed economies, the quality of service is very high in Japan.

Hailing a taxi in a major city rarely takes more than a few seconds, lowering demand for Uber-type services.

Despite this bleak picture, there are some successes, notes Sabetto, with younger generations showing a greater interest in the sharing economy.

Car and bike sharing schemes are taking off and meal delivery service UberEATS has been a hit in Tokyo since arriving in 2016.

But local startups struggle to stay financially afloat, Sabetto said, in a country that tends to pride monozukuri or craftsmanship above innovation.

Some firms are moving away from the cities into the countryside, where a steady trend of depopulation has made the sharing economy more attractive.

Uber last month said it would launch a pilot program this summer to hook up tourists and residents with available drivers in the western Awaji island.

But Sabetto said a change in culture was needed for the sharing economy to really take root.

I would like foreigners that are aware of the sharing economy to make their voice heard more to change the situation, he said.

Tourism Observer

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